NEW YORK - The market for schizophrenia drugs is worth
$12 billion globally, and it's growing at 30% per year. But sales of
Zyprexa, the market's top seller, are actually falling over concerns of
diabetes risks tied to the drug.

Twelve-month sales of the drug in the U.S. fell 3%
from last year. Now, to make matters worse, the trial lawyers are getting
involved, but drugmaker Eli Lilly (nyse: LLY
- news - people ) is defending the Zyprexa franchise ferociously--and will help
physicians do the same. But the diabetes concerns that are drawing the
lawyers' interest are not likely to subside. With Zyprexa sales totaling
$4.3 billion annually, the drug is Lilly's best seller, and the company
would like to keep it that way.

In a
letter to physicians obtained by Forbes.com, Lilly rails against
advertising campaigns from attorneys seeking to bring class-action suits
related to the diabetes risk against Lilly and physicians. The letter is
signed by Robert Baker, the associate director of medical neurosciences at
Lilly. Baker warns that such advertisements can lead seriously ill
patients to stop taking their medicine--and points to statements from
patient advocacy organizations fretting over this danger. He writes that
Lilly has contacted the law firms running these advertisements, asking
them at the very least to tell patients never to stop taking their
medication without consulting a physician.

Then Baker drops a surprise: Lilly will help physicians
who have been targeted by personal injury lawyers defend themselves. "We
plan to vigorously defend Zyprexa against any and all lawsuits," the
letter says. "Lilly will also provide selected resources to any party
(e.g., a physician) named as a co-defendant, including scientific
expertise, assistance in finding experts, and coordination with counsel."

Lilly spokeswoman Marni Lemons says
the company would have liked to go further and offer indemnity to doctors
who prescribed Zyprexa--a measure the company took with lawsuits brought
against Prozac. But guidelines from the American Medical Association
prevent it from doing so. Henry Nasrallah, a psychiatrist at the
University of Cincinnati who has been critical of Zyprexa for its diabetes
risk and who does not consult for Lilly, said Lilly's defensive measure
appears to be appropriate. "Lilly has always been good at providing legal
support," says Nasrallah.

"I think
they're sort of being forced into this by the personal-injury lawyers who
now see this as a source of revenue," says Jeffrey Lieberman, a
psychiatrist at the University of North Carolina, Chapel Hill, who is
conducting a trial comparing major schizophrenia drugs for the National
Institutes of Health. "It's all very unpleasant and unseemly so it has a
bad flavor or odor about it, but this is basically an ugly and potentially
bitter active battle."

Rachel
Abrams, an attorney at Hersh & Hersh in San Francisco whose firm has
filed 20 cases against Eli Lilly in connection with Zyprexa, says that
most cases are focusing on Lilly, not on individual doctors. At issue, she
says, is why Zyprexa's package insert did not warn of the risk of high
blood sugar until relatively recently. Such warnings might have led
doctors to measure the blood sugar of patients on Zyprexa regularly,
preventing at least some deaths. For this reason, Lilly is the focus of
the case, not the doctors who are prescribing the drugs.

Lieberman conducted pivotal trials
on Abilify, a schizophrenia drug from Bristol-Myers Squibb (nyse: BMY) and Otsuka Pharmaceuticals that has made its lack of weight gain a
major selling point. But he does not see giving up on Zyprexa yet, even as
a first choice. Less than half of patients on the drug gain significant
weight, he says, and many physicians are comfortable prescribing it.
Instead, he sees drugs with less potential for making patients fat, such
as Abilify and Pfizer's (nyse: PFE) Geodon, as options for switching patients who have trouble. Young
patients also might benefit, he says, as they are more likely to gain
weight on Zyprexa and more likely to stop treatment because of it.

But Lilly may have a tough time
re-igniting Zyprexa's once rapid growth as many doctors focus on the
diabetes risk of schizophrenia medicines. There is no evidence that any
one antipsychotic is more effective than another, says Nasrallah, but
Zyprexa and Novartis' (nyse: NVS) little-used Clozaril cause more weight gain and more risk of
diabetes, according to an opinion paper from the American Diabetes
Association. The Food and Drug Administration has added similar warning
language regarding diabetes to all schizophrenia drugs, on the assumption
that all these medicines are part of the same class. But Lieberman says
that decision "flies in the face" of available evidence.

The problem is not just diabetes,
but also heart diseases. Daniel Casey, a psychiatrist at Oregon Health
& Science University, says that schizophrenia patients are already at
higher risk for heart attacks than other people. Three-quarters of them
smoke, he says. Abilify and Geodon don't cause weight gain and is giving
both of them some traction in the market--although sales are still
considerably less than Zyprexa's. Says Casey: "We don't want to impose an
addition health burden in people who are already at high risk for
cardiovascular disease."

Even if
Lilly fights off the lawyers, that kind of talk from doctors can't be a
good thing.